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Summary of the opinion 01 Small expectations on the palm oil supply side 1.1 Malay: The report meets expectations, and the inventory continues to accumulate. Mpob report shows that the output in September increased by 2.6% by about 1.77 million tons, a year-on-year increase of ne
.1 Malay : The report meets expectations, and inventory continues to accumulate
Mpob report shows that the output in September increased by 2.6% by about 1.77 million tons, a year-on-year increase of nearly 4%; this output basically meets the estimates of the three major institutions and the domestic institutions of Malay, and the overall level is at the median of the same period in history. The issue of year-on-year increase in output will be discussed in the next chapter.
Sppoma predicts that the production in October will decline by 10.4% to about 1.59 million tons in the first 10 days; Sppoma's estimate data has been slightly lower in recent times, so it is expected that the possible production cut in October will be around 5-7%. The specific reason for the production cut may be due to the gradual increase in precipitation. In terms of inventory, due to the increase in Malay imports in September, the end of the period increased to 2.315 million tons, slightly higher than market expectations; due to the possible production cuts in October, it is expected that the end of the period will only drop to 2.3 million tons in October. It is predicted that the Malay inventory will remain high throughout the fourth quarter, and the decline process will be slow.
.2 Malay: Analysis of factors for year-on-year increase in production in September
Malay's production in September increased by nearly 4% year-on-year. Judging from the current situation of foreign workers, it does not support the year-on-year growth in production. Since the problem of foreign workers began in July last year, the output and foreign workers' year-on-year differentiated after June, but since the current situation of foreign workers is slightly worse than that of the same period last year, the output should be limited to below the 0 axis year-on-year.
The only thing left is the impact of weather factors on output. From the precipitation deviation in the Malay production area, it can be seen that the precipitation in August and September this year is relatively low compared with the same period last year. Therefore, under the limitation of insufficient foreign workers, the impact of precipitation on output will become more sensitive, that is, the year-on-year reduction caused by heavy rains or floods in the later period will be more serious.
.3 Malay: The problem of foreign workers is like a "chronic disease"
As of September, the entry of foreign workers in Malaysia is still not optimistic. Although the year-on-year of foreign workers has been reduced from -21% to -13%, since the year-on-year reduction of foreign workers' entry began in August last year, it can be understood that the current situation of foreign workers is worse than when there was a shortage last year; and from the growth rate of foreign workers' entry in recent months, It is also lower than the regular growth rate in previous years, which means that not only does the number of Malaysian foreign workers continue to be insufficient, but the targeted introduction policy mentioned earlier has not seen the increase in the growth rate of foreign entry brought about by the implementation.
Although the problem of foreign workers is no longer the focus of market transactions, the shortage of foreign workers continues to limit the upper limit of Malay production and amplifies the impact of weather factors on output; the decline in foreign workers' entry does not represent the current decline in labor force in the plantation, but since the Malay PLKS visa is 5 years, the continuous insufficient incoming workers will lead to a slow decline in the original visa labor base. If not resolved in time, the output will continue to affect the long-term direction.
.4 Indonesia : "It is difficult to distinguish between true and false" Gakpi production data
According to October 11, Indonesia's Gakpi announced that palm oil production in August was 4.31 million tons, a decrease of 7%; exports increased to 4.33 million tons, a record high in the same period. At the same time, inventory fell to 4.04 million tons at the end of the period, a decrease of nearly 32%.
Due to the rapid decline in inventory, the market is confused about the authenticity of the data; first of all, the output of 4.3 million tons is extremely low. If May is holidays due to holidays and June-July due to excessive inventory, then the only thing that affects the output in August seems to be relatively high inventories;
Since the export value of the same period last year was close to 4.27 million tons, and in August there was a general demand for restocking in countries with demand in August, the export of 4.33 million tons is relatively acceptable.
Then for inventory, no matter whether the output is 4.8 million tons or 4.31 million tons, the final end of the period will fall back to below 4.5 million tons. Therefore, even if the data is artificially adjusted, there is a certain rationality in the pace of inventory change. But the actual output may be higher, which in turn raises the overall inventory level.
.5 Indonesia: Try to deduce inventory from the price
Since we have doubts about the authenticity of Indonesia's Gakpi data, we try to verify the inventory data from the price side:
First of all, it is the average price of bulk oil in Indonesia. At that time, when the domestic edible oil price in Indonesia rose rapidly, the Indonesian government issued a DMO policy and set the price red line of the policy at 14,000 rupiah. Below this price, the DMO policy will be cancelled (but the current DMO policy is still in effect). It can be seen that the price on October 11 was 13,600 Indonesian rupiah, and the overall price remained between 13,600 and 13,800 after entering August. Although the price is not closely related to inventory, if derived from Gakpi data, the inventory in October is expected to drop to a low of 3.8 million tons; the current price of bulk oil has not risen, at least it means that there is no shortage of oil on the domestic consumer side of Indonesia. Or in other words, the inventory in Indonesia is still abundant now.
followed by the fruit bundle purchase price, and the linkage between the fruit bundle purchase price and inventory is relatively high. The current inventory corresponding fruit bundle purchase price is significantly lower. If we deduce it based on Gakpi's data, the inventory in October fell below 4 million tons, and the corresponding October purchase price should be above 3,000. The current price in the first two weeks of October has fallen, so the fruit bundle purchase price does not support Gakpi's data.
2
weather
.1IOD&NINO: Continuous negative phase of Indian Ocean dipoles
According to the IOD data released by the Australian Meteorological Bureau in September, the current negative phase of Indian Ocean dipoles is continuing to deepen; the negative phase of IOD will bring heavy precipitation to the western part of Southeast Asian palm oil production, and the West Malaysia Peninsula in Malaysia, as well as the Sumatra, Riau and Zhanbei areas in Indonesia. It can also be seen from the precipitation forecast in Malaysia that the expected precipitation in the northwest coastal areas from November to December is very high, and Indonesian meteorological conditions also forecast heavy rainstorms and thunderstorms in most parts of Indonesia's Sumatra and Kalimantan on Tuesday.
This time is a rare superposition of IOD negative phase and La Nina dual climate systems, and the time corresponds to the rainy season in Southeast Asia. Therefore, the flood disasters caused by heavy rains from November to December may be more serious than in previous years.
.2 Indonesia: Flood warning data is expected to increase
Due to the poor intuitiveness of the precipitation data last week, this time, the flood warning data of the Indonesian Meteorological Bureau was used to briefly analyze the future climate situation.
As mentioned earlier, Southeast Asia has entered the dry season in August and September. Although the climate system will bring more precipitation to palm oil-producing areas, there is no need to worry about the flooding problem in August and September. Currently, there are medium (yellow) possible flooding expectations in the central and western Kalimantan in September.
However, it is worth noting that due to the increase in precipitation in October, floods are expected to increase in some production areas in central Kalimantan and southern Sumatra (red), so it is necessary to be wary of the impact of climate issues on palm oil production and prices in the early stages of the fourth quarter.
html Precipitation in Malaysian production areas is expected to rise to between 300-500mm in November. In some areas such as Sarawak, the precipitation in the central area of is expected to be between 400-500mm, close to the historical high; the precipitation in the southwest coastal areas of West Malaysia is expected to be greater than 500mm, which is very prone to floods and floods.
html Precipitation in the Malaysian production areas will rise to between 400-500mm in November, precipitation in some areas will exceed 500mm, and the heavy rain cover area in the northwest coastal areas will be greatly expanded, and flood disasters are expected to increase significantly.
3
grease and crude oil
.1 The price of crude oil and oil is linked to the linkage of
Oil and fat prices are closely related to the trend of crude oil prices. The recent sharp rebound in crude oil prices has also affected the sharp rise in domestic palm oil prices after the holiday. As the proportion of raw diesel blending increases year by year, the price ratio of crude oil and oil is also rising year by year. From the price ratio of each oil and crude oil, it can be seen that:
Domestic palm oil and crude oil ratio is at a relatively low historical level, so the impact of the rise in crude oil prices at the current stage is extremely sensitive to palm oil prices;
And US soybean oil is currently near the median price ratio with crude oil, so the linkage between the two is not sensitive, and since the price is transmitted to China, there is a linkage between soybean oil and crude oil, so the linkage between domestic soybean oil and crude oil will be weak. The price comparison between
European rapeseed oil and Brent crude oil is at an extremely low historical level, so rapeseed oil also has good linkage in theory, but due to pressing, the linkage between domestic rapeseed oil and crude oil will be weakened. Therefore, the current theoretical linkage between domestic oil and fat and crude oil (not discussing the supply and demand of single varieties): palm oil > rapeseed oil > soybean oil.
4
Demand side
Demand side
.1 India: Inventory shown by mpoc rebounded
htmlPalm oil exported to India in September decreased by 20.95% month-on-month to 185,000 tons. Although India's imports from Malaysia continued to decline month-on-month in September, due to large imports from Indonesia, India's overall palm oil imports in September were not low.
According to Mpoc data, Indian palm oil inventory was close to 484,000 tons in September, an increase of 150,000 tons from 330,000 tons in August. Indian soybean oil inventory in September was close to 181,000 tons, basically the same as 190,000 tons in August. Overall inventory levels recovered rapidly. Since the SEA data for September has not been released, Mpoc's inventory data is borrowed here to prove India's import situation.
From the perspective of oil and fat price difference, the price difference between soybean oil, sunflower oil and palm oil is at a historical high. The higher cost-effectiveness of palm oil will be conducive to the increase in imports and thus trigger substitution.
.2 China: It is expected that domestic palm oil inventory will increase
html At the end of September, domestic palm oil inventory has recovered to above 450,000 tons, in line with our previous estimates. Therefore, the overall inventory recovery rhythm will not be much different in the future (that is, the consumption estimate is more reasonable).
Judging from the current arrival situation, it is expected that palm oil imports will be more than 650,000 tons (including industrial palm); it is also expected that domestic arrivals in October may be around 450,000 tons. In the later period, due to the serious inversion of import profits, the progress of buying ships is slow. From the perspective of domestic price spreads, a high spot spread is still needed to trigger the replacement of palm oil for other oils.
.3 China: The amount of palm oil to the port continues to increase
Since the statistical data lacked the data of the arrival of the port for the week of September 17, it will decrease in the total number. However, according to the lack of the weekly quantity, it is also close to 600,000 tons in September. Therefore, it is not a big problem to actually arrive at the port in September to reach more than 650,000 tons. At the same time, domestic inventory also basically proves this change.
The inverted profit of palm oil will lead to the demand side forcing the industry side to lower prices to give profits, which will stimulate palm oil imports. It is expected that the price of palm oil in the production area will continue to be weaker than the demand side in the future, showing a pattern of strong inside and weak outside.
.4 China: Domestic oil inventory
Domestic palm oil inventory recovery is the smoothest, which has risen from 250,000 tons at the end of August to 535,000 tons this week. At the same time, the consumption substitution caused by the increase in arrival of palm oil has also alleviated the inventory pressure of the other two major oils to a certain extent.
But after all, from the perspective of consumption, the huge amount of soybean oil cannot be covered by palm oil. Currently, the replacement mainly occurs in the South China region, and the East China region has just begun to replace it. The impact of demand-side substitution on prices will be very slow, so for the inflection point of the price difference between oil and fat, there is still a need for substantial changes in supply, such as rapeseed and soybeans arrived in Hong Kong in November.
Data source: MET, REFINITIV, BMKG, Mpob, Gapki, Malay Entry and Exit Administration Bureau, MPOC, Longzhong Information , China Customs, China Statistics Bureau , Agricultural Products Network, Zijin Tianfeng Futures Research Institute
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